Several major UK refineries have begun steadily exporting butane cargoes into the coasters market following Northwest Europe's transition between winter and summer specification gasoline season, sources said this week, which has put pressure on butane prices.
On Wednesday, high-quality coaster butane cargoes were assessed at 93% of CIF NWE naphtha cargoes at $999.25/mt, down from 95% on April 11, when naphtha cargoes were valued at $1,056/mt.
Traders indicated that Shell's 272,000 b/d Stanlow plant, Murco's 105,682 b/d Milford Haven refinery and ExxonMobil's 329,500 b/d Fawley refinery have all begun to export coaster cargoes of butane averaging 1,000 to 3,000 mt in size, indicating a transition to summer-grade production.
Butane is a high-octane gasoline feedstock valuable to many blenders because it is generally less expensive than other high-octane blend components like reformate, alkylate and MTBE.
However, butane has a high kilopascal rating, making it more difficult to blend into summer-grade gasoline, which requires a low kPa rating, allowing it to perform better at warmer temperatures.
The transition between winter and summer specification gasoline occurs between March and April in the US and much of Europe, but does not begin in the UK and Scandinavia until the beginning of June. Currently, the UK market is using intermediate specification gasoline, which also has a high kPa rating.
Larger quantities of butane exports can indicate that a refinery has transitioned to summer gasoline production, increasing the availability of butane on the Northwest European spot market.
Market sources said that there has been some demand for high-quality coaster cargoes for use as petrochemical and MTBE feedstocks.
